WONG WAH ON v. TSUNG TSIN ASSOCIATION AND ANOTHER

HCMP 1265/2019

[2019] HKCFI 2746

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1265 OF 2019

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REASONS FOR DECISION

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Application

1.  By a summons dated 20 August 2019 (the “Summons”), Wong Wah On (the “Applicant”) applied under section 42 of the Companies Ordinance, Cap 622 (the “Ordinance”) and Order 102, rule 2 of the Rules of the High Court, Cap 4A for the following orders:

“ the Registrar of Companies do rectify the information in the Companies Register by registering the Form ND2A filed on 3^rd July 2018.”

2.  This matter first came before this Court for a 30 minutes hearing on 12 September 2019.  On 11 September 2019, Ms Cheung Man Na Winnie (“Ms Cheung”) and Mr Lai Kwok Wai (“Mr Lai”) both filed summonses to be joined as parties to the Summons.  As the Court then were not appraised of the grounds of objections by Ms Cheung and Mr Lai. In view of the lack of urgency, I considered that both Ms Cheung and Mr Lai should be heard. Accordingly, I directed that:

(1)  All the summonses be adjourned to 2:30 pm on 4 October 2019;  

(2)  All affirmation evidence of Ms Cheung and Mr Lai were to be filed by 4 pm on 26 September 2019;

(3)  All affirmation evidence of the Applicant were to be filed by 30 September 2019; and

(4)  Costs reserved.

3.  Parties have since filed their respective affirmation evidence and I have duly considered the submissions (both written and oral) of the Applicant, Ms Cheung and Mr Lai.  After the oral hearing on 4 October 2019, I made an order in terms of the Summons.  I now give my reasons.

Material facts

4.  There are disputes amongst members of Tsung Tsin Association Limited, the 1^st respondent (the “Association”) about its management and control from about October 2009 until now.  Mr Lai is one of the core members of the Association.  Together with the 2^nd, 4^th to 10^th respondents in HCMP 2056/2018, they form the members of the executive committee of the Association (the “36^th Executive Committee”).  

5.  The Applicant, as a member of the Association, presented a petition on 20 November 2018 which was heard by Mr Justice Harris on 10 January 2019 (the “Petition”).  On the same day, the learned Judge delivered his Decision.  In the said Decision, the learned Judge said:

“ 1. I have before me a petition dated 20 November 2018 issued by Mr Wong Wah On, a member of the 1^st Respondent Tsung Tsin Association Limited, pursuant to section 724 of the Companies Ordinance, Cap 622. The 1^st respondent is a company limited by guarantee and it was formed on 2 May 1959 (‘the Company’). Its objects and its purpose are to protect and promote the industrial, commercial and other lawful interests of the Hakka Community in Hong Kong, China and abroad. The 2^nd to 10^th respondents were, it is accepted by the petitioner, properly appointed to the board of the Company. However, it would appear that by 2008, their positions as directors of the Company ended as a result of the provisions of the articles requiring board members to stand for re-appointment if they wish to continue in office, pursuant to article 68 of the Articles of Association.

2. It would appear that in recent years, concerns have arisen amongst members of the 1^st respondent concerning the management of the Company and as a consequence, steps were taken by disgruntled members to have an extraordinary general meeting convened at which they could vote on resolutions to reconstitute the board. This eventually took place, as a consequence of requisitions that were served pursuant to article 25, at an extraordinary general meeting on 22 May 2018 (‘the EGM’).

3. I am satisfied that the EGM was duly convened in accordance with the Articles of Association of the 1^st respondent; the requisite number of members, namely 50, required by article 15 for a requisition was satisfied; article 16 which governs the service of notices convening an extraordinary general meeting was satisfied; the necessary quorum was present at the EGM; and in the absence of the persons who until that time had been holding themselves out as the chairman and vice chairman of the board (or as it is known in the case of the 1^st respondent its Executive Committee), they were replaced by a duly elected chairman and resolutions reconstituting the board were duly passed on a show of hands.”

6.  Mr Justice Harris made a declaration that the Applicant and other members of the new executive committee form the current executive committee of the Association.

7.  The Respondents in the Petition (including Mr Lai) then took out a summons dated 26 April 2019 to obtain an interim stay order against Mr Justice Harris’ orders.  At the hearing on 15 May 2019, Madam Recorder Linda Chan SC dismissed the summons.  The Respondents then took out a summons on 21 May 2019 to obtain leave to appeal against the decision of Madam Recorder Linda Chan SC which was dismissed with costs to the Applicant on 31 May 2019.

8.  On 13 June 2019, the Respondents took out another summons to obtain leave to appeal from the Court of Appeal against Madam Recorder Linda Chan SC’s decision.

9.  On 9 July 2019, the Court of Appeal refused to grant the application for leave to appeal with an indemnity costs order against the Respondents.  In the Court of Appeal’s Reasons for Judgment dated 18 July 2019, it is pertinent to note that the Court of Appeal expressly stated that:

“ 17. The Respondents did not file any evidence to explain what irreparable prejudice or damage would be caused by giving effect to the judgment. This was so notwithstanding that the judgment was dated 10 January 2019 and the setting aside application was only made on 6 March 2019, almost two months later. The hearing before the Recorder took place on 15 May 2019, another two months later. If there was any actual adverse effect or any real possibility of any adverse impact occasioned by giving effect to the judgment, the Respondents should have been able to depose to the same in the evidence filed before the Recorder.

…

19. Further, it does not follow from a change of control of management of the Association that irreparable damage or prejudice would be occasioned. Whoever in control in the board shall owe fiduciary duty to the Association, including the duty to exercise the power of management in the interest of it.

20. The evidence of the respondents (filed in the application for setting aside the judgment) which was placed before us consisted mostly of assertions and bare statements.”

10.  The application to set aside Mr Justice Harris’ orders is now fixed to be heard on 3 December 2019.

Analysis

11.  Mr Singh for the Applicant submitted that the present application is merely to give effect to Mr Justice Harris’ orders dated 10 January 2019 (“Mr Justice Harris’ Orders”).  I agree that it is absolutely essential that effects must be given to orders of the Court.  There is no dispute that Mr Justice Harris’ Orders are valid and binding.

12.  Mr Lai had applied for an interim stay of Mr Justice Harris’ Orders and such application was first refused by Madam Recorder Linda Chan SC and then dismissed by the Court of Appeal.  In the circumstances, I see no good reasons why the rectification of the corporate records of the Association with the Companies Registry should not be allowed.

13.  In Re China Nice Education Research Publishing Investment and Management Co Ltd [2016] 3 HKLRD 525 (HCMP 343/2016, 25 May 2016), Mr Justice Godfrey Lam at §§13 – 14 said:

“ 13. By contrast, section 42(1) of the Companies Ordinance empowers the court to do one of two things, ie rectifying any information on the register and removing any information from it. It is implicit that information may be rectified otherwise than by removal. Subsection (2) provides as follows:

If, in relation to an application for the purposes of subsection (1), a document showing the rectification is filed with the Court, the Court may require the Registrar to rectify the information by registering the document.

14. This, it seems to me, provides for a specific way (albeit not, in my view as at present advised, the only way) of rectification of the register, that is to say, by requiring the Registrar to register a document filed in the proceedings showing the rectification.”

14.  The current register provides (ie 2016 Annual Return) factually inaccurate information to the public as it does not reflect the effects of Mr Justice Harris’ Orders.  I am of the firm view that Mr Justice Harris’ Orders must be given effects to.

15.  The Registrar of Companies took a neutral stance and submitted that no order as to costs should be made against it.

16.  Mr Koo for Mr Lai opposed the application on the ground that since the set aside hearing is to take place in December, the status quo should be maintained.  I am of the view that that is a wrong approach. The status quo is that Mr Justice Harris’ Orders should be given effect to. Further, Mr Lai cannot now obtain a de facto interim stay of Mr Justice Harris’Orders having failed to obtain the same from the Court of Appeal.

17.  Ms Tang for Ms Cheung submitted that there are inconsistencies between the filings by the Applicant.  What happened was that before the Applicant engaged his current firm of solicitors, he filed a Form ND2A on 30 December 2016 and that was not done pursuant to any court order recognizing the validity of the EGM in May 2018.

18.  I agree with Mr Singh that any alleged inconsistency is irrelevant since the 3 July 2018 Form ND2A reflects Mr Justice Harris’Orders which supersedes the December 2016 Form ND2A by recognizing the directors appointed on 22 May 2018 and the necessary cessation of the old directors on the same date.

19.  Finally, in relation to the Registrar of Companies’ concern that there is at present an annotation in the filed returns to the effect that “… the directorship of the Company are in progress”, I am of the view that that concern reinforces the need for a rectification.  The validity of Mr Justice Harris’ Orders is not in doubt.  Pending the set aside application which is to be heard in December 2019, the position in relation to the directorship of the Association is clear and such clear position should be reflected in the public records so that the public and members of the Association will not be confused.

Disposition

20.  For all the reasons stated above, this is a very straightforward case and I made the following orders:

(1)  An order in terms of the Originating Summons dated 20 August 2019.

(2)  There be no order as to costs between the Applicant and the Registrar of Companies.

(3)  Ms Cheung and Mr Lai’s Summonses to join as a party to the Originating Summons are dismissed.

21.  As far as costs is concerned, I made a gross sum assessment that:

(1)  Ms Cheung is to pay the Applicant the sum of HK$76,374.00 forthwith;

(2)  Mr Lai is to pay the Applicant the sum of HK$86,254.00 forthwith.

22.  Finally, it remains for me to thank Mr Singh for the Applicant and Ms Tang and Mr Koo for Ms Cheung and Mr Lai for their helpful assistance to this Court.